Guillaume v. United States Department of Veterans Affairs

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF FLORIDA

CASE NO. 20-60276-CIV-ALTMAN/Hunt

JEAN FRANTZ GUILLAUME,

Plaintiff,

v.

KENNETH M. HYDE, et al.,

Defendants.

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ORDER GRANTING MOTION TO DISMISS

The Defendants filed a Motion to Dismiss (the “Motion”) [ECF No. 31]. The Plaintiff filed

a response (the “Response”) [ECF No. 37]. And the Defendants replied (the “Reply”) [ECF No.

43]. This Order follows.

THE FACTS

The Plaintiff, Jean Frantz Guillaume, is a disabled United States Navy Veteran and the

owner of “AFILY8 Government Solutions” (“AFILY8”). Compl. at 6, 2. AFILY8 provides—

through the United States Department of Veterans Affairs’ (“the VA”) “Veterans First Contracting

Program” (“the Program”1)—services to veteran-owned small businesses that facilitate those

businesses’ bids for government contracts. Compl. at 2.

In November 2008, Scott F. Denniston, the VA’s Director, first approved AFILY8 for

participation in the Program. See id. Then, in September 2014, AFILY8—a service-disabled-

veteran-owned small business (an “SDVOSB”)—applied for (and received) placement on the

1 See 38 U.S.C. § 8127(a) (noting that the Program’s objective is “to increase contracting

opportunities for small business concerns owned and controlled by veterans and small business

concerns owned and controlled by veterans with service-connected disabilities”).

“Veteran’s Administration Vendors List.” Id. at 6.2

Some time later, AFILY8 secured nine government contracts for its clients. See id. While

AFILY8 was performing on those contracts, Earl Titus—a VA Onsite Examiner from the Premier

Company (“Premier”)3—demanded that AFILY8 provide certain documentation to maintain its

status in the Program. See id. at 6. After AFILY8 provided the requested documentation, Titus sent

Daniel Pearsall (Premier’s Senior Director of Government Programs) a report, in which he

recommended that AFILY8 be removed from the Vendors List. See id. at 6–7. Pearsall “certified”

the “report as true and correct” and forwarded it to Tiana Burnett (Premier’s Senior Director of

Operations). Id. Burnett, in turn, forwarded that same report to Marcus E. Board (Premier’s CEO),

who “reviewed the report and without any independent review of the documentation, certified it

as true and correct.” Id. Board then forwarded the report, along with a recommendation that

AFILY8 be removed from the Vendors List, to Thomas McGrath at the VA’s Center for

Verification and Evaluation. See id. at 7–8. McGrath accepted the report and its findings “without

conducting an independent review of the facts” and sent it to the United States Department of

Small Business Administration (the “SBA”). Id. In doing so, McGrath similarly suggested that

AFILY8 be removed from the Vendors List. Id. Once it received the report from McGrath, the

SBA removed AFILY8 from the VA’s Vendors List. See id.

AFILY8 appealed the removal. See id. “[W]ithout conducting an independent review of

Plaintiff’s documents and supporting facts,” the administrative law judge, Kenneth Hyde, denied

AFILY8’s appeal and affirmed its removal from the Vendors List. See id.

2 See 38 U.S.C. § 8127(f)(1) (“[T]he Secretary shall maintain a database of small business concerns

owned and controlled by veterans, small business concerns owned and controlled by veterans with

service-connected disabilities, and the veteran owners of small business concerns.”).

3 Premier is a privately-owned company that provides onsite examinations of VA facilities through

a contract with the VA.

Guillaume then filed this lawsuit against (i) The VA; (ii) the SBA; (iii) Judge Kenneth

Hyde; (iv) Premier; (v) McGrath; (vi) Board; (vii) Burnett; (viii) Pearsall; and (ix) Titus. See id. at

1.4 While Guillaume does not list specific counts, he, at various times, relies on: (i) the

Constitutional Right to Contract; (ii) the Due Process Clause; (iii) the statutory right to contract in

38 U.S.C. §§ 101–111; and (iv) the Declaratory Judgment Act. See id. at 8–10. For these violations,

Guillaume asks for: (i) a declaratory judgment; (ii) punitive damages; and (iii) compensatory

damages. See id. at 10–13.

The Defendants responded with a Joint Motion to Dismiss the Complaint under Federal

Rules of Civil Procedure 12(b)(1), 12(b)(2), and 12(b)(6). See generally Mot. In their Joint Motion,

the Defendants argue that this Court lacks subject-matter jurisdiction over the case, see id. at 5,

12–13, 16; that this Court lacks personal jurisdiction over the Premier Defendants, see id. at 14–

16; that the Federal Defendants are entitled to either judicial immunity or qualified immunity, see

id. at 5–12; and that the Complaint fails to state a plausible claim for relief, see id. at 17–20. On

the issue of subject-matter jurisdiction, however, the Defendants advance competing positions.

Whereas the Federal Defendants contend only that the Complaint is barred by the doctrine of

sovereign immunity, see id. at 5, the Premier Defendants say that the Plaintiff lacks standing to

bring his claim, see id. at 15.

Because this Court lacks subject-matter jurisdiction to hear the case, this Order adjudicates

only those portions of the Motion that seek dismissal under FED. R. CIV. P. 12(b)(1).

***

AFILY8 has already brought this same claim once before. See AFILY8 Government

4 For ease of analysis, the Court will refer to the first three Defendants—the VA, the SBA, and

Judge Hyde—as “the Federal Defendants” and the remaining Defendants as “the Premier

Defendants.”

Solutions, LLC v. United States Government, Office of Hearings and Appeals, SBA, No. 19-61698-

CIV-BLOOM, ECF No. 10 (S.D. Fla. July 29, 2019).5 In that case, Judge Bloom noted that

“Guillaume is attempting to assert the claims in this case on behalf of Afily8 Government

Solutions, LLC (“Plaintiff”), an entity of which he is the CEO and agent.” Id. at 1. But, after

making that finding, Judge Bloom sua sponte dismissed AFILY8’s Complaint because AFILY8

had not retained counsel for its defense. See id. at 2.

THE LAW

I. Pro Se Pleadings

When a plaintiff elects to proceed pro se, the Court must interpret his complaint liberally.

See Sause v. Bauer, 138 S. Ct. 2561, 2563 (2018); cf. Erickson v. Pardus, 551 U.S. 89, 94 (2007);

Coffield v. Broward Cnty. Jail, 2017 WL 3600942, at *4 (S.D. Fla. July 21, 2017), report and

recommendation adopted sub nom. Coffield v. Broward Cnty. Main Jail, 2017 WL 3623677 (S.D.

Fla. Aug. 22, 2017). In so doing, however, the Court may not “serve as de facto counsel or []

rewrite an otherwise deficient pleading in order to sustain an action.” Shuler v. Ingram & Assocs.,

441 F. App’x 712, 716 n.3 (11th Cir. 2011).

II. Subject-Matter Jurisdiction

A motion to dismiss under Rule 12(b)(1) challenges a federal court’s subject-matter

jurisdiction over the case. “The requirement that jurisdiction be established as a threshold

matter . . . . is ‘inflexible and without exception.’” Steel Co. v. Citizens for a Better Env’t, 523 U.S.

83, 94–95 (1998) (quoting Mansfield, C. & L.M.R. Co. v. Swan, 111 U.S. 379, 382 (1884)). Indeed,

5 “A district court may take judicial notice of certain facts without converting a motion to dismiss

into a motion for summary judgment.” Universal Express, Inc. v. SEC, 177 F. App’x 52, 53 (11th

Cir. 2006) (citation omitted). And public court records “are among the permissible facts that a

district court may consider.” Id. (citations omitted).

even when a party fails to raise the issue of subject-matter jurisdiction, these jurisdictional

“delineations must be policed by the courts on their own initiative.” Ruhrgas AG v. Marathon Oil

Co., 526 U.S. 574, 583 (1999) (citations omitted); see also FED. R. CIV. P. 12(h)(3) (“Whenever it

appears . . . that the court lacks jurisdiction of the subject matter, the court shall dismiss the

action.”); accord Fitzgerald v. Seaboard Sys. R.R., Inc., 760 F.2d 1249, 1251 (11th Cir. 1985) (“A

federal court not only has the power but also the obligation at any time to inquire into jurisdiction

whenever the possibility that jurisdiction does not exist arises.” (citation omitted)).

One principle of subject-matter jurisdiction is that the “United States is generally immune

from suit unless it has expressly waived that immunity by statute.” S. Spanish Trail, LLC v.

Globenet Cabos Submarinos Am., Inc., 2019 WL 3285533, at *3 (S.D. Fla. July 22, 2019) (citing

Zelaya v. United States, 781 F.3d 1315, 1322 (11th Cir. 2015)); see also F.D.I.C. v. Meyer, 510

U.S. 471, 475 (1994) (finding that the doctrine of “[s]overeign immunity is jurisdictional in

nature”). Indeed, the “terms of [the United States’] consent to be sued in any court define that

court’s jurisdiction to entertain the suit.” United States v. Sherwood, 312 U.S. 584, 586 (1941); see

also United States v. Mitchell, 463 U.S. 206, 212 (1983) (“It is axiomatic that the United States

may not be sued without its consent and that the existence of consent is a prerequisite for

jurisdiction.”).

A second principle of subject-matter jurisdiction is that the plaintiff bears the burden of

establishing his standing to assert his claim. See Lujan v. Def.’s of Wildlife, 504 U.S. 555, 560

(1992). Under Article III of the Constitution, the subject-matter jurisdiction of the federal courts

is limited to “Cases” and “Controversies.” U.S. CONST. art. III, § 2. And “the core component of

standing is an essential and unchanging part of the case-or-controversy requirement of Article III.”

Lujan, 504 U.S. at 560. Thus, standing is a “threshold question in every federal case, determining

the power of the court to entertain the suit.” Warth v. Seldin, 422 U.S. 490, 498 (1975). “In the

absence of standing, a court is not free to opine in an advisory capacity about the merits of a

plaintiff’s claims.” Bochese v. Town of Ponce Inlet, 405 F.3d 964, 974 (11th Cir. 2005).

To establish standing, a “plaintiff generally must assert his own legal rights and interests,

and cannot rest his claim to relief on the legal rights or interests of third parties.”6 Warth, 422 U.S.

at 499 (citing Tileston v. Ullman, 318 U.S. 44 (1943)). “Related to this principle . . . is the so-

called shareholder standing rule[—]a longstanding equitable restriction that generally prohibits

shareholders from initiating actions to enforce the rights of the corporation unless the corporation’s

management has refused to pursue the same action . . . .” Franchise Tax Bd. of Cal. v. Alcan

Aluminium Ltd., 493 U.S. 331, 336 (1990). The only exception to this “shareholder-standing

doctrine” is that a “shareholder with a direct, personal interest,” separate and apart from the

corporation’s interest, may sue in his own name. Id. Even under that exception, however,

6 The doctrine of third-party standing has long been considered an element of what was

formerly known as “prudential standing.” See Kowalski v. Tesmer, 543 U.S. 125, 128–29 (2004).

But the Supreme Court has cast grave doubts on the viability of the prudential-standing doctrine—

calling the “prudential” label “misleading” and justifying the doctrine’s contours on other, non-

prudential grounds. See Lexmark Int’l, Inc. v. Static Control Components, Inc., 572 U.S. 118, 125

(2014). While the Lexmark Court ultimately upheld the continued vitality of the “zone-of-interests

test”—a separate prong of the prudential-standing inquiry—it left “consideration of [the third-

party standing] doctrine’s proper place in the standing firmament [for] another day.” Id. at 127 n.3.

Nevertheless, for two reasons, this Court will apply the third-party standing doctrine here.

First, Lexmark did “not present any issue of third-party standing,” id. As a result, its discussion of

the doctrine is nonbinding dicta. See Roberts v. Louisiana, 431 U.S. 633, 640 (1977) (“[T]o the

extent that [a court] alluded to subsections of the [] law that were not before the Court, those

statements are nonbinding dicta.”). Second, the Eleventh Circuit has cited the third-party standing

doctrine approvingly as recently as 2018—four years after Lexmark. See W. Ala. Women’s Ctr v.

Williamson, 900 F.3d 1210, 1325 (11th Cir. 2018), cert. denied sub nom., Harris v. W. Alabama

Women’s Ctr., 139 S. Ct. 2606 (2019). This Court is thus bound to apply the third-party standing

test as the governing law of this Circuit. See Inversiones y Procesadora Tropical INPROTSA, S.A.

v. Del Monte Int’l GmbH, 921 F.3d 1291, 1301 (11th Cir. 2019) (lower courts must follow a prior

decision of the Eleventh Circuit even when a Supreme Court opinion weakens that decision);

Tobinick v. Novella, 884 F.3d 1110, 1118 (11th Cir. 2018) (same).

“diminution in value of the corporate assets is insufficient direct harm to give the shareholder

standing to sue in his own right.” Stevens v. Lowder, 643 F.2d 1078, 1080 (5th Cir. Unit B Apr.

1981).7

A motion to dismiss under Rule 12(b)(1) may attack the Court’s subject-matter jurisdiction

either facially or factually. Lawrence v. Dunbar, 919 F.2d 1525, 1528–29 (11th Cir. 1990). On a

facial challenge, the Court must, as with other Rule 12(b) motions, limit its review to the factual

allegations in the complaint—accepting well-pled allegations as true. Id. A factual attack, on the

other hand, challenges “the existence of subject matter jurisdiction in fact” and requires that the

Court examine materials outside of the pleadings, such as testimony, declarations, and affidavits,

to ensure the proper exercise of its jurisdiction. Id. While the Premier Defendants do not specify

which kind of challenge—facial or factual—they have levied against the Court’s subject-matter

jurisdiction, the Court need not delve beyond the four corners of the Complaint to resolve their

Motion.

ANALYSIS

It is by now well-established that shareholders may not sue individually for injuries

suffered by their corporations. See Cook v. Trinity Universal Ins. Co. of Kan., 297 F. App’x 911,

913–914 (11th Cir. 2008) (“Generally, status as a corporate shareholder will not give an individual

standing to prosecute a claim on behalf of a corporation.”); KMS Rest. Corp. v. Wendy’s Int’l, Inc.,

361 F.3d 1321, 1324 (11th Cir. 2004) (“Any rights created by the letter of intent belonged to [the

corporation] . . . . Because [the shareholder] has no rights of his own under the letter of intent or

the agreement, he lacks standing to pursue on his own behalf the . . . claim.”); Lowder, 643 F.2d

7 Decisions of the former Fifth Circuit issued prior to October 1, 1981 are binding precedent in

this Circuit. See Bonner v. City of Prichard, 661 F.2d 1206, 1207 (11th Cir. 1981) (en banc).

at 1080 (“An action to redress injuries to a corporation cannot be maintained by a shareholder in

his own name but must be brought in the name of the corporation.”).

This is true even when, as here, the individual plaintiff is the company’s sole owner. See

Fla. Seed Co. v. Monsanto Co., 105 F.3d 1372, 1375–76 (11th Cir. 1997) (“The only injuries

allegedly suffered by Frit are as a shareholder and guarantor. Thus, Frit has suffered no [] injury.

Courts uniformly have held that stockholders, even sole stockholders such as Frit, lack standing to

bring [] suit for injury to their corporations.” (emphasis added)); see also Cheney v. Cyberguard

Corp., 213 F.R.D. 484, 495 (S.D. Fla. 2003) (“Courts have noted in various contexts that a plaintiff

may not assert a claim for damages suffered to a corporation, even where such individual plaintiff

is the sole shareholder or president of the corporation.” (citation omitted)); accord Grimm v.

Borough of Norristown, 226 F. Supp. 2d 606, 631 (E.D. Pa. 2002) (finding that individual cannot

maintain claim on behalf of corporation “even where the plaintiff is the sole shareholder of the

corporation, its president, or a key employee” (collecting cases)).

The only exception to this rule is that a “shareholder with a direct, personal interest,”

separate and apart from that of the corporation, may sue in his own name. Alcan Aluminium, 493

U.S. at 336. Even under this exception, however, “diminution in value of the corporate assets is

insufficient direct harm to give the shareholder standing to sue in his own right.” Lowder, 643 F.2d

at 1080; see also Gregory v. Mitchell, 634 F.2d 199, 202 (5th Cir. Jan. 1981) (finding that the

“district court was correct in holding that ‘neither officers nor stockholders . . . can maintain an

action to redress an injury to the corporation even though the value of their stock is impaired as a

result of the injury.’” (citation omitted in original)).

As the Complaint’s factual averments make clear, Guillaume’s claims are premised on an

injury that, if it exists at all—a question the Court does not here decide—was plainly suffered by

AFILY8. Indeed, while Guillaume superficially claims that his right to contract was violated, see

Compl. at 8–9, the Complaint alleges that, in fact, it was “Plaintiff’s Company [that] was granted

authorization and his Company [that] began entering into Contracts with the Veteran’s

Administration,” Compl. at 6 (emphasis added). And, while Guillaume goes on to argue that, “[a]s

a disabled Veteran, [he] has the Statutory right to be the first in line to bid and enter a small business

contract . . . pursuant to [the applicable VA statutes],” Compl. at 9, the statute that governs the

verification process at issue here, 38 U.S.C. § 8127, deals only with the entities those veterans own

and states that its goal is “to increase contracting opportunities for small business concerns owned

by veterans.” 38 U.S.C. § 8127(a)(1). It is, therefore, unsurprising that subsection (f) of that

statute—the provision AFILY8 cited in its appeal to Judge Hyde—provides that, “[i]f a small

business concern is not included in the database because the Secretary does not verify the status

of the concern as a small business concern or the ownership or control of the concern, the concern

may appeal the denial of verification.” Id. at (f)(8)(A) (emphasis added).

The statute at issue, then, outlines the process by which a company like AFILY8 can

qualify as an SDVOSB, id. at (e); gives businesses like AFILY8 preference in government bids, id.

at (d); delineates how entities like AFILY8 make it onto the Vendors List in the first place, id. at

(f)(4); explains how companies like AFILY8 remain on that list, id. at (f)(2)(A); and describes the

process by which businesses like AFILY8 may appeal their removal from that list, id. at (f)(8)(A).

In short, if either the VA or the SBA made any mistakes in administering the above procedures,

those mistakes caused injury to AFILY8—not to Guillaume. Accordingly, Guillaume’s attempt to

bring this case on AFILY8’s behalf fails for lack of standing.

Nevertheless, for the Plaintiff’s benefit, this Court will also address the Defendants’

sovereign-immunity contentions. Under the doctrine of sovereign immunity, the “United States is

generally immune from suit unless it has expressly waived that immunity by statute.” S. Spanish

Trail, LLC, 2019 WL 3285533, at *3. In the Administrative Procedure Act (the “APA”), the United

States waived its sovereign immunity for suits brought by persons “suffering legal wrong because

of agency action, or adversely affected or aggrieved by agency action within the meaning of the

relevant statute.” 5 U.S.C. § 702.8 But the APA waived the Government’s sovereign immunity

only for claims that seek injunctive relief—not for claims (like this one) for money damages. See

id. And nothing in the APA “confers authority to grant relief if any other statute that grants consent

to suit expressly or impliedly forbids the relief which is sought.” Id.

As relevant here, the Tucker Act makes clear that the Court of Federal Claims9 “shall have

jurisdiction to render judgment on an action by an interested party objecting to a solicitation by a

Federal agency for bids or proposals for a proposed contract or to a proposed award or the award

of a contract or any alleged violation of statute or regulation in connection with a procurement or

a proposed procurement. . . . before or after the contract is awarded.” 28 U.S.C. § 1491(b)(2).10 In

other words, AFILY8 cannot maintain a claim against the United States, its agencies, or its officers

if it does not establish a clear statutory waiver of sovereign immunity—either under the APA, the

Tucker Act, or some other statute.

8 Under 38 U.S.C. § 8127(f)(8)—the statutory provision at issue here—the “decision of the Office

of Hearings and Appeals shall be considered a final agency action.”

9 While the text of the Tucker Act actually says that federal district courts and the Court of Federal

Claims shall have concurrent jurisdiction over such actions, see 28 U.S.C. § 1491(b)(2),

Congress—as part of the Administrative Dispute Resolution Act of 1996, Pub. L. No. 104–320,

§ 12(d), 110 Stat. at 3875—passed a sunset provision, which, on January 1, 2001, terminated

federal district court jurisdiction over these cases. See also Emery Worldwide Airlines, Inc. v.

United States, 264 F.3d 1071, 1079 (Fed. Cir. 2001) (“It is clear that Congress’s intent in enacting

the ADRA with the sunset provision was to vest a single judicial tribunal with exclusive

jurisdiction to review government contract protest actions.”).

10 While this Court makes no recommendations about what form any future complaint by the

Plaintiff (or his company) should take, these statutes should play a role in the framing of that

complaint.

TK

This suit is being dismissed without prejudice. The Plaintiff can thus refile this case at any

time. But, if the Plaintiff does choose to refile, he should keep a few things in mind. First, as this

Order makes clear, an individual may not maintain a suit that is premised on injuries suffered by

the corporate entity he owns. Instead, the corporation must bring the suit in its own name. Second,

a corporation may not appear pro se. So, if AFILY8 does intend to bring a future lawsuit, it must

retain counsel to represent it in that case. Third, AFILY8 cannot maintain a lawsuit against the

United States, its agencies, or its officers unless it establishes a clear statutory waiver of sovereign

immunity.

Being fully advised, the Court hereby

ORDERS AND ADJUDGES as follows:

1. The Defendants’ Motion to Dismiss [ECF No. 31] is GRANTED. This case is

DISMISSED WITHOUT PREJUDICE for lack of subject-matter jurisdiction.

2. The Clerk of Court shall REFUND the Plaintiff’ filing fee.

3. The Clerk of Court is directed to CLOSE this case. All pending motions are

DENIED AS MOOT. All pending hearings and deadlines are TERMINATED.

DONE AND ORDERED in Fort Lauderdale, i. June 2020.

ROYK.ALTMAN ————

UNITED STATES DISTRICT JUDGE

cc: counsel of record

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